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classify Costs Seymour Clothing Co. manufactures a variety of clothing types for distribution to several major retail chains. The following costs are incurred in the production and sale or blue jeans Required: Identify each cost listed below as variable costs, fixed costs, or mixed cost A. Shipping boxes used to ship orders B. Consulting fee of $200,000 paid to industry specialist for marketing advice C. Straight line depreciation on sewing machines D. Salesperson's salary, $10,000 plus 2% of the total sales E. Fabric F. Dye G. Thread H. Salary of designers I. Brass buttons 3. Legal fees paid to attorneys in defense of the company in a patent infringement suit, $50,000 plus $87 per hour K. Insurance premiums on property, plant, and equipment, $70,000 per year plus $5 per $30,000 of insured value over $8,000,000 L. Rental costs of warehouse, $5,000 per month plus $4 per square foot of storage used M. Supplies N. Leather for patches identifying the brand on Individual pieces of apparel 0. Rent on plant equipment, $50,000 per year P. Salary of production vice president Q. Janitorial services, $2,200 per month R. Wages of machine operators S. Electricity costs of $0.10 per kilowatt-hour T. Property taxes on property, plant, and equipment Next Check My Work Break Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $188 per unit during the current year. Its income statement is as follows: Sales $188,000,000 Cost of goods sold (100,000,000) Gross profit $88,000,000 Expenses Selling expenses $16,000,000 Administrative expenses 12,000,000 Total expenses (28,000,000) Operating income $60,000,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 25% Administrative 50% 50% expenses Management is considering a plant expansion program for the following year that will permit an increase of $11,280,000 in yearly sales. The expansion will Increase fixed costs by $5,000,000 but will not affect the relationship between sales and variable costs Required: 1. Determine the total variable costs and the total fixed costs for the current year, Total variable costs Total fixed costs 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year Unit variable cost Unit contribution margin HOW2 Online eBook Show Me How Management is considering a plant expansion program for the following year that will permit an increase of $11,280,000 in yearly sales. The expansion will increase fixed costs by $5,000,000 but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs for the current year, Total variable costs Total fixed costs 2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year, Unit variable cost Unit contribution margin 3. Compute the break even sales (units) for the current year. units 4. Compute the break-even sales (units) under the proposed program for the following your units 5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $60,000,000 of operating income that was earned in the current year units 6. Determine the maximum operating Income possible with the expanded plant. 7. If the proposal is accepted and sales remain at the current level, what will the operating income or loss be for the following year? 8. Based on the data given, would you recommend accepting the proposal? a. In favor of the proposal because of the reduction in break-even point. b. In favor of the proposal because of the possibility of increasing income from operations. c. In favor of the proposal because of the increase in break-even point. d. Reject the proposal because if future sales remain at the current level, the income from operations will increase. e. Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales. Choose the correct answer Previous NO Break-Even Sales and cost-Volume-Profit Chart Last year, Hever Inc. had sales of $500,000, based on a unit selling price of $250. The variable cost per unit was $175, and fixed costs were $75,000. The maximum sales within Hever Inc's relevant range are 2,500 units. Hever Inc. is considering a proposal to spend an additional $33,750 on billboard advertising during the current year in an attempt to increase sales and utilize unused capacity Required: 1. Construct a cost-volume-profit chart on your own paper, indicating the break-even sales for last year. Break-even sales (dollars) Break even sales (units) 2. Using the cost-Volume-profit chart prepared in part (1), determine (a) the operating income for last year and (b) the maximum operating income that could have been realized during the year Operating income Maximum operating income 3. Construct a cost-volume-profit chart (on your own paper) indicating the break-even sales for the current year, assuming that a noncancellable contract is igned for the additional billboard advertising. No changes are expected in the unit selling price or other costs. Dollars Units 4. Using the cost-Volume-profit chart prepared in part (3), determine (s) the operating income if sales total 2,000 units and (b) the maximum operating income that could be realized during the year Operating income at 2,000 units Maximum operating income Contribution Margin, Break-Even Sales, Cost-Volume-Pront Chart, Margin of Safety, and Operating Leverage Wolsey Industries Inc expects to maintain the same inventories at the end of 203 as at the beginning of the year. The total of all production costs for the Year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A tummary report of these estimates is as follows: Estimated Fixed Cost Estimated Variable Cost (per unit sold) Production costs Direct materials 546 40 Direct labor Factory overhead Selling expenses: Sales salaries and commissions $200,000 20 110,000 40,000 12,000 7,600 1 Advertising Travel Miscellaneous selling expense Administrative expenses office and officers salaries Supplies Miscellaneous administrative expense Total 132,000 10,000 13,400 4 1 $525,000 $120 It is expected that 21,875 units will be sold at a price of $160 a unit Maximum sales within the relevant range are 27,000 units. Required: 1. Prepare an estimated income statement for 2083, Wolsey Industries Inc. Estimated Income Statement Check My Work Previous Required: 1. Prepare an estimated income statement for 2023 Wolsey Industries Inc. Estimated Income Statement For the Year Ended December 31, 20Y3 Cost of goods sold: Total cost of goods sold O Gross profit Expenses Selling expenses: Total selling expenses Administrative expenses a Total administrative expenses o Total expenses Operating income Check My Work